What Affects Your Credit Score? A Simple Guide

If you’ve ever tried to get a credit card, car loan, or mortgage, you’ve probably heard about your credit score. But what is it, really, and what makes it go up or down? Let’s break it down in plain language.

What is a credit score?

A credit score is a number that predicts how likely you are to pay your bills on time. Lenders use it to decide whether to approve you for credit and what interest rate to offer.

Most scores range from 300 to 850. Higher = better.

There are different scoring models (like FICO® and VantageScore®), but the basics are similar.

What affects your credit score?

Think of your score like a report card made up of five main subjects:

1) Payment history (the biggest factor): Do you pay on time? Even one payment that’s 30 days late can hurt. Payments 60 or 90 days late do more damage. Things like collections, charge-offs, repossessions, and bankruptcies have the biggest negative impact.

Tip: Turn on autopay for at least the minimum due and set reminders so nothing slips through the cracks.

2) Amounts owed (a.k.a. credit utilization)

This is how much of your available credit you’re using on revolving accounts like credit cards.

• Credit utilization ratio = (your card balances) ÷ (your credit limits).

• Lower is better. Try to stay under 30%—under 10% is even better.

Example: If your total limit is $5,000 and your balances total $1,000, your utilization is 20% (good). If you’re at $4,000, that’s 80% (not as good).

Tips to help:

• Pay balances down before the statement closes so lower amounts get reported.

• Ask for a credit limit increase (only if you won’t spend more).

• Spread purchases across cards to keep each card’s utilization low.

3) Length of credit history

How long your accounts have been open, plus the average age of all your accounts. This helps lenders understand how well you’ve managed your credit over time.

Tip: Think twice before closing your oldest credit card if it’s in good-standing; it can lower your average age, especially on VantageScore.

4) New credit (hard inquiries and new accounts)

Each time you apply for credit, the lender may do a hard inquiry, which can dip your score a bit for a short time. Opening several new accounts in a short period can have a larger effect.

Tip: Comparing loan offers (think - for a mortgage or car) within a short window (often 14–45 days, depending on the model) is usually treated as one inquiry.

5) Credit mix

Showing you can manage different types of credit helps lenders see you as trustworthy. Therea are two main types to consider:

• Revolving credit: credit cards, home equity or other personal lines of credit

• Installment loans: auto, student, personal loans, mortgages

Don’t take on debt you don’t need just for “mix,” but a normal variety over time helps.

What doesn’t directly affect your credit score

• Changes in your income

• Getting married

• Savings and investments

• Using a debit card

• Checking your own score (called a soft pull)

The bottom line

Your credit score reflects consistent, on-time payments and responsible use of available credit over time. You don’t need tricks, just a few steady habits. Start small, be consistent, and your score will follow.

Become a member to read more about common credit score myths, quick wins to rebuild your score, and a simple action plan for the next 30 days. Members also get access to our credit score quick guide.